G.R. No. L-72188. September 15, 1986.
RODOLFO EUSEBIO, Petitioner, vs. INTERMEDIATE APPELLATE COURT and ROHIMUST SANTOS, Respondents.

FACTS

The case involves a co-ownership dispute over an 811.30 sq. m. lot in Quezon City between petitioner Rodolfo Eusebio and respondent Rohimust Santos. The lot originated from a leasehold right held by their common predecessor, Philip Zinsineth. In 1974, the parties, through Rodolfo and Rohimust’s brother Fernando Santos Jr., entered into a contract to sell with the owner, Gregorio Araneta, Inc., agreeing to jointly purchase and later subdivide the property. Rodolfo advanced payments for Fernando’s share. Upon full payment, title was issued solely in Rodolfo’s name. Fernando later transferred his rights to his brother, Rohimust. Rodolfo filed for judicial partition, and the trial court awarded him 611.30 sq. m. and Rohimust 200 sq. m., ordering the demolition of any encroaching improvements without compensation.
The Intermediate Appellate Court initially affirmed the trial court. However, upon Rohimust’s motion for reconsideration, it amended its decision, ruling that Rohimust had a right to retain any house and improvements on his allotted portion until paid their value. Rodolfo elevated the case, arguing this modification was erroneous.

ISSUE

Whether a co-owner is entitled to reimbursement for the value of improvements found on the portion of the co-owned property allotted to him upon partition.

RULING

The Supreme Court ruled in favor of Rodolfo Eusebio, setting aside the Appellate Court’s amended resolution and reinstating its original decision affirming the trial court’s judgment. The legal logic centers on the nature of possession among co-owners and the applicable provisions of the Civil Code.
The Court clarified that Article 546 of the Civil Code, which grants a possessor in good faith the right to reimbursement for useful improvements, does not apply between co-owners. A co-owner’s possession of a specific part of an undivided property is deemed to be in the name of all co-owners. Therefore, neither party possessed any specific portion in the concept of an owner for himself, precluding a claim of possession in good faith over improvements.
The governing provision is Article 543. It provides that each co-owner is deemed to have exclusively possessed the part ultimately allotted to him from the commencement of the co-possession. Consequently, upon partition under Rule 69 of the Rules of Court, Rohimust is deemed to have been the exclusive possessor of his 200 sq. m. allotment since the co-ownership began, including any buildings thereon. He can thus keep or demolish those improvements without owing compensation to Rodolfo. By the same logic, Rodolfo owes no compensation for improvements on his allotted 611.30 sq. m. The trial court’s order for demolition of encroachments without payment was correct. The case was remanded for actual partition proceedings.